TMI Blog1999 (6) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and in the circumstances of the case, there is no basis to hold that Navabharat Ferro Alloys Ltd. could not be regarded as an agent of the non-resident foreign company under section 163 ?" The facts, in brief are as follows : The relevant assessment years are 1976-77 and 1977-78. The assessee-company, Navabharat Ferro Alloys Limited, hereinafter will be called the "Indian company". The Indian company entered into agreement with Energomach Export, Moscow, USSR, hereinafter called the "foreign company", for the purpose of purchasing two machines of 16.5 MVA Open Electric Arc Furnace under the first agreement dated May 28, 1971, worth about Rs. 44,14,875 and under the second agreement dated May 30, 1978, worth about Rs. 57,22,500. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first agreement referred to above. On the basis of the two agreements, the Income-tax Officer held that the assessee-company is liable to pay tax as it acted as an agent of the foreign company under section 163 of the Income-tax Act and as there is business connection between the Indian company and the foreign company. On appeal, the Commissioner confirmed the said order. On further appeal to the Tribunal, the Tribunal by following the judgment of this court in CIT v. Hindustan Shipyard Ltd. [1977] 109 ITR 158, held that there is no business connection between the Indian company and the foreign company, The Tribunal on; an interpretation of the terms and conditions of the agreements held that except purchasing the machinery and accesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol over the personnel ; that both the companies had the authority to change the composition and the number and that, therefore, this court held that there was "business connection" falling within the meaning of section 9(1) of the Income-tax Act. Therefore, it is argued that the said judgment is squarely applicable to the facts of the present case. While dealing with the case in Bharat Heavy Plate and Vessels Limited [1979] 119 ITR 986 (AP.), the learned judges had also referred to the case in CIT v. Hindustan Shipyard Ltd. [1977] 109 ITR 158 (AP), and found that both the cases are distinguishable on facts. Since the main thrust of the argument of learned counsel for the Revenue is the judgment in Bharat Heavy Plate and Vessels Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sakhapatnam. In our view, Bharat Heavy Plate and Vessels Limited's case [1979] 119 ITR 986 (AP), is distinguishable on the facts from the facts of the present case. In that case, the agreement contained two components-one is for payment of consideration for supply of machinery by the non-resident company and the second is for consideration payable for rendering consultation services. In other words, the non-resident company was paid certain amount for rendering consultation service, and other amount for supply of machinery. In view of the above, the learned judges held that there is "business connection" ; whereas on the facts of the present case, we find under the agreements a consolidated amount of Rs. 44,14,875 and Rs. 57,22,500 was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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